Sunday, December 9, 2012

Electricity Market Reform in the UK

An Energy Bill introduced in Parliament last month is pushing forward one more element of Britain's comprehensive CCS Roadmap policy in the form of Electricity Market Reform (EMR), an initiative designed to spur more than£100 billion in new, low-carbon energy infrastructure investments by the end of the decade. The proposed EMR encompasses the entire electricity sector, and rests primarily on novel "contracts for difference" (CFDs) intended to provide price guarantees for clean energy generators. If generators sell power for less than preset "strike prices," they will be compensated for the difference by a new, state-backed entity. When prices exceed this level, generators will pay back the difference. Specific CFD strike prices, including for electricity derived from power plants equipped with CCS, will be announced next year. The Energy Bill also creates a new capacity market, and institutes a new emissions performance standard for power stations that will effectively require CCS for all new coal-fired units. The government expects to pass the bill in 2013, with CFDs coming into force the following year.